PRESS RELEASE
Chancellor Merkel Just Did It in Germany, but We're Not Allowed To Do It Here!
May 21, 2010 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).
Acting after the close of the markets on Tuesday, May 18, in a sudden surprise move made on orders from the German government, Germany's financial regulatory agency Bafin banned certain derivatives trades for one year or longer. It banned naked short sales of Eurozone countries' bonds, naked credit default swaps (CDS) against those bonds, and naked short sales of the stocks of ten major German banks and insurance companies.
Speaking the next day in the German parliament, the Bundestag, Chancellor Angela Merkel said that she had been forced to act in this way against what she called "an existential threat to financial stability in Europe and even the world."
Merkel is right. As leading US economist Lyndon LaRouche said on Thursday, May 20,
While the U.S. Congress, especially the Senate, is being tied up with all kinds of silliness, the fact of the matter is that a warning shot for the dissolution of the entire world financial system has already taken place. The world as a whole stands on the edge of a sudden, overnight collapse, which will make the 1,000 point drop in the Dow Jones on May 6 look like a small perturbation. We could wake up one morning, and find that we have no financial system at all-an instant plunge into a New Dark Age.
The immediate key to this situation is the derivatives. The derivatives markets must be shut down now!
German Chancellor Merkel, with her sovereign ban on parts of the derivatives market as of May 19, has done the right thing, acting to protect her nation from the devastation of the speculators. The U.S. government must be forced to take the same action, immediately.
But Barack Obama, acting through Senator Harry Reid, has refused even to allow a vote to restore enforceability to Title VII, governing derivatives, of the so-called Wall Street Reform Act. The discredited Senator Chris Dodd of Connecticut surreptitiously removed the enforceability of the regulations of Title VII, making them mere "suggestions" instead of "regulations," in the words of derivatives expert Michael Greenberger quoted in firedoglake. When Arkansas Sen. Blanche Lincoln, the author of Title VII, and Washington Sen. Maria Cantwell introduced an amendment to restore enforceability, Harry Reid refused to allow it to come to a vote.
